Palladium: From Tony Stark’s Chest to your Portfolio

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It’s also used by Tony Stark to power the reactor in his chest that kept him alive in Iron Man. Surely, the palladium was toxic and he ended up having to replace it with other elements, but you get the idea…it’s powerful stuff!

The case for investing in palladium is a simple supply and demand argument.

South Africa and Russia are the two big players in the global market for palladium. Together, they represent over 80% of world production. The only problem is that there’s trouble ahead.

In 2012, the world’s supply of mined palladium stood at 6.3 million ounces, which itself was 12% lower than the year before. That itself would make some people sit up and listen to the whole story.

Labor disputes and strikes have put the mining industry in South Africa into shambles. The two main unions are at each other’s throats and the problem hasn’t yet resolved itself.

Meanwhile in Russia, stockpiles of the metal are shrinking. The estimates say Russia will supply even less than the 250,000 ounces they provided in 2012, a figure already dwarfed by the 775,000 ounces they shipped over in 2011.

Not only is supply expected to be constricted, but demand for palladium shows no signs of letting up. The demand for the precious metal is driven by the auto industry – which uses 2/3rds of the world supply – and auto industry is expected to grow, driven in part by the expansion of the middle class in emerging economies like China, India and Brazil.

Seeing as the disputes in South Africa will take time to figure out, and with expected growth in the automotive sector, the foundations are laid for a price appreciation.

So, naturally the question becomes – how can I take advantage of it?

One way is to actually own some palladium, and exchange traded funds (ETFs) offer you a way to do that. The ETFS Physical Palladium Shares (NYRSE: PALL) represents shares of real, physical palladium bars and reflects the performance of the price of palladium. This is not only a convenient but also cost-effective way to invest in palladium, because the fees associated with such funds are low.

Don’t take my word for it though. Do some research and you’ll see what I’m talking about. Until then,

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